We recently published a list of 12 High Growth Low Debt Stocks to Invest in Now. In this article, we are going to take a look at where Flywire Corporation (NASDAQ:FLYW) stands against other high growth low debt stocks to invest in now.
The global financial markets are experiencing heightened volatility, influenced by a confluence of economic and geopolitical factors. The broader market has entered correction territory, reflecting investor apprehension regarding escalating trade tensions and potential economic slowdowns.
The recent imposition of tariffs by the United States has been a significant catalyst for market fluctuations. In response, major indices such as the broader market and Nasdaq Composite have experienced notable declines. This environment has led to a reassessment of investment strategies, with a growing emphasis on asset quality and financial resilience.
While debt can be a useful tool for fueling growth, excessive debt levels can pose significant risks. High debt-to-equity (D/E) ratios indicate that a company is heavily reliant on borrowed funds, which can lead to financial strain, especially during economic downturns. Companies with D/E ratios exceeding 2.0 are generally considered risky, as they may face challenges in meeting their debt obligations, potentially leading to insolvency.
Conversely, companies with low debt levels enjoy several advantages. They have greater financial stability, as they are less burdened by interest payments and have a reduced risk of bankruptcy. This financial flexibility allows them to invest more in growth opportunities, such as research and development, marketing, or capital expenditures, without the constraints of significant debt obligations. Moreover, these companies are often more attractive to investors, as they present a lower risk profile.
Investing in High-Growth, Low-Debt Stocks
In the current climate, focusing on high-growth companies with low debt levels can be a prudent strategy. These companies typically exhibit robust earnings growth and the ability to navigate economic headwinds effectively. Financial advisors are also increasingly recommending investments in quality stocks characterized by strong earnings, low debt, and reliable management. This approach focuses on identifying firms that are expanding without overleveraging, thereby maintaining financial stability and operational flexibility.
The Appeal of High Growth
High-growth companies are characterized by their ability to increase revenues and earnings at a rate significantly above the market average. This rapid expansion often leads to substantial capital appreciation for investors. For instance, companies with low debt have historically outperformed their high-debt counterparts. Over a 23-year period, low-debt growth companies achieved annualized returns of 17.1%, compared to just 7.5% for high-debt firms. Notably, low-debt stocks outperformed high-debt stocks in 19 of those 23 years, equating to an 83% beat rate. Given this, we will take a look at some of the best high growth stocks with low debt.
Our Methodology
To identify high-growth, low-debt stocks, we screened for companies with strong competitive advantages and an estimated average annual EPS growth rate of over 15% for the next five years, based on data from FINVIZ.com. Additionally, we filtered for companies with a debt-to-equity ratio below 0.5. The EPS Next 5 Year growth rate was used as the primary ranking metric. The final list of stocks is ranked in ascending order of EPS growth rate, prioritizing companies with the strongest earnings expansion potential.
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A digital tablet presenting various payment options alongside an educational lecture on the benefits of diverse capabilities.
Flywire Corporation (NASDAQ:FLYW)
EPS Growth Rate (Next 5 Years): 158.8%
Flywire Corporation (NASDAQ:FLYW) is a global payments enablement and software company that streamlines complex transactions across industries such as education, healthcare, travel, and B2B. With an expected EPS growth rate of nearly 160%, FLYW is one of the best high growth stocks to buy.
Flywire Corporation (NASDAQ:FLYW) has acquired Sertifi for $330 million, expanding its travel payments business into the hospitality sector, including major hotel brands like Marriott, Hilton, and Hyatt. Sertifi’s platform, which serves 20,000 hotel locations, digitizes event bookings, group sales, and payments through deep integrations with leading Property Management Systems like Oracle’s OPERA Cloud and Salesforce. The acquisition is expected to add $35-$40 million in revenue in FY2025.
Flywire Corporation (NASDAQ:FLYW) reported strong Q4 2024 results, with revenue increasing 17% YoY to $117.6 million, driven by 27.6% growth in total payment volume to $6.9 billion. Adjusted EBITDA surged to $16.7 million, more than doubling from $7.7 million in Q4 2023. The company added 180 new clients in the quarter, contributing to 16% YoY client growth. Despite a net loss of $15.9 million, Flywire continued to optimize operations, including a 10% workforce reduction, while positioning itself for long-term growth with its recent Sertifi acquisition.
Overall, FLYW ranks 4th on our list of high growth low debt stocks to invest in now. While we acknowledge the potential for FLYW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FLYW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
